Crude oil is rallying

Crude oil is closing in on $US50 per barrel.

West Texas Intermediate crude futures in New York rose 2% on Wednesday morning to as high as $US49.70 per barrel, the highest level in about two and a half months.

On Tuesday evening, the American Petroleum Institute reported that US inventories unexpectedly fell by 1.2 million barrels, whereas analysts had expected a build of nearly 2 million barrels.

The Energy Information Administration (EIA) will release its official data at 10:30 a.m. ET.

Crude oil gained as much as 5% on Tuesday after the EIA’s short-term outlook estimated that US crude production fell by 120,000 in September compared to August. Output is projected to decline through mid-2016 before it picks up again.

In other oil-related news, OPEC secretary-general Abdullah el-Badri told reporters that he sees higher demand for the cartels 12 members’ oil, and a drop in output form non-members.

Here’s a chart showing the rise in crude over the last two days:

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